RMB APPRECIATION

CHINA: RENMINBI ON SUMMER BREAK

Qing Wang

Morgan Stanley Global Forum, August 18, 2010

Since it exited from its peg against the USD on June 20, the RMB has appreciated against the USD rather fast, by about 0.8% in the first 10 trading days through July 2 (see China Economics: Renminbi Exits from USD Peg and Returns to Pre-Crisis Arrangement, June 20, 2010). However, the exchange rate has since been broadly stable at around 6.77, while most other EM currencies have registered more meaningful appreciation against the USD.

Authorities' Educational Campaign

The Chinese authorities recently launched an education campaign articulating the virtues of, and their commitment to, a flexible exchange rate arrangement in the form of five consecutive articles published under the name of PBoC Deputy Governor Hu Xiaolian (see Appendix in the full report for the five articles).

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